Welfare Reform on the Web (March 2007): National Health Service - funding

Changing the agenda

B. Brown

Community Practitioner, vol.80, Feb. 2007, p.8-10

The Agenda for Change programme for reforming NHS staff pay has acted as a spur for new, flexible working practices in the NHS. It has facilitated the creation of innovative roles and services by separating pay and conditions from professional titles, and by enabling the development of jobs based purely on the skills and competencies required. This article briefly explores the role of Agenda for Change in facilitating service reconfiguration, partnership working, and patient choice.

This report heavily criticises the Department of Health (DoH) for its handling of a joint venture with health information analysts Dr Foster. The National Audit Office concludes that the deal cannot demonstrate good value for money because the DoH did not go out to competitive tender for the work. It also paid £4m more than the value of a 50% share in the joint venture called Dr Foster Intelligence. Nor did it obtain a controlling interest in Dr Foster Intelligence in return for its investment. Since the deal was signed, Dr Foster Intelligence has projected profits 50% lower than presented in the business case.

New model contract threatens survival, foundations warn

L. Donnelly

Health Service Journal, vol.117, Feb. 1st 2007, p. 5

The new model contract between commissioners and acute trusts says that hospitals will have to foot the bill for activity that breaches locally agreed demand management schemes or exceeds forecasts. The same document sets out a system of fining hospitals for failure to meet the 18-week referral to treatment target. The combination of the two penalties leaves acute trusts in a dilemma. Speeding up activity in pursuit of the 18-week target could leave them at risk of having to pay for exceeding agreed activity levels.

NHS deficits

Health Committee

London: TSO, 2006 (House of Commons papers, session 2006/07; HC 73)

In the last two years the NHS has been in overall deficit and there has been an increase in the number of NHS organisations with a deficit. The deficits have many causes and this report highlights some of them. The funding formula allocates considerably more money per head to some PCTs than others. This can be related to the scale of health inequalities but it can make financial balance harder to achieve. The report recommends that the formula be reviewed. Consideration should be given to basing the formula on actual need rather than proxies of need. Poor central management has contributed to the deficits. Government targets, such as the 4-hour A&E target, have been expensive to meet and have had unintended consequences which have imposed additional costs. The Committee welcomes the Department’s commitment to improve forecasting and undertake more local testing of new policies. It must make its calculations explicit and make them widely available well in advance of implementation. Poor local management is also to blame: there are many examples of poor financial information, inadequate monitoring and an absence of financial control. There is a need to strengthen the role and position of Finance Directors. Finally, as presently operating, Resource Accounting and Budgeting (RAB) is not a suitable accounting regime to use within the NHS, and the report recommends that an alternative to, or refinement of, RAB be introduced.

NHS set for £13m net surplus despite rising levels of debt

V. Vaughan

Health Service Journal, vol.117, Feb. 22nd 2007, p. 5

It is predicted that the NHS will realise a £13m surplus in financial year 2006/07. Top-slicing of primary care trust funds and savings made by Strategic Health Authorities from central programme budgets have ensured that £1.3bn deficits within the service will be balanced out, enabling the NHS to hit its priority target of balancing its books.

NHS surplus masks trusts deep in debt

N. Hawkes

The Times Feb. 21st 2007, p.26

Figures released by the government for the third quarter of the 2006-2007 financial year show an overall surplus of £13m in NHS finances. However the combined deficits of hospitals that have failed to break even this year has increased to £1,318m from £1,312m last year. The article also claims that the figures are misleading as funds were ‘top-sliced’ at the beginning of the year to create a reserve. The author is certain that this reduction in income of £1.14bn plunged struggling Primary Care Trusts into deficit. Further savings were made from delays in operations, and spending cutbacks on training, supplies and recruitment. Critics have labelled these strategies as short term fixes “for a long-standing problem.”